28 April 2022USA analysis

Experience and data driving innovation, says Tennessee director of captives

Tennessee is seeing an increasingly innovative range of captives, according to the state’s director of captive insurance in the Tennessee Department of Commerce & Insurance.

Talking to rating agency AM Best at the RIMS 2022 Riskworld conference in San Francisco, Jonathan Habart said he was seeing more unique approaches.

“When I started in captive insurance, a lot of them formed on the same basis. Lately, I’ve been seeing a lot of what I’ve termed bespoke or unique systems coming through captives,” he told AM Best.

Among the examples given was a cannabis captive crop policy for insuring against crop loss due to levels of THC (the principal psychoactive constituent of cannabis) too high for use.

Experience was helping drive the innovation, he said.

“A lot of it is data and experience. As we have people that get more experienced with their captives and get in there, understand what they’re doing and what they’re using it for, they’re tweaking it out, or they have a lot of their own personal data,” he said.

“They’ve looked at their risks that they’ve taken to the traditional market and said, ‘How can we create our own system to cover this?’”.

Both the hard market and the pandemic had increased in captives, Habart added, but those considering one should take their time, he advised.

“Get to know a good captive manager. Talk to several domiciles, get to know what’s out there and what works best for them,” he said.